A proposal from the U.S. Labor Department to require financial advisers to put retirement investors’ interests ahead of their own has received much criticism from financial firms and individuals who earn commissions for selling investment products. But some big financial-services companies that generally offer investments direct to consumers without commissions also have gripes with the plan.

Vanguard Group,
T. Rowe Price Group Inc.
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and Fidelity Investments voiced their concerns about the Labor Department’s so-called fiduciary-duty proposal as the public-comment period came to a close late Tuesday.

In part, the three firms said that language in the proposal defining “investment advice” could crimp their ability to provide factual, nonindividualized information to individual-retirement-account investors and to participants in some company retirement plans they administer.

Under the proposal, certain discussions between a 401(k)-plan participant and an adviser about asset allocation “would have to be generic and not linked to options in their plan, making it much less useful for participants,” Vanguard principal and head of government relations Ann Combs said in an interview Wednesday.

In congressional testimony on Tuesday, Labor Secretary Thomas Perez said the Labor Department continues to be open to hearing comments and advice from “industry stakeholders.”

“Our goal in this proposed rulemaking is straightforward—to align the best interest of the customer to those of the adviser and the firm,” said Mr. Perez. “We are very flexible on the question about how to get this done.”

The Labor Department proposal aims to require brokers and others dealing with retirement-plan and IRA investments to put their clients’ best interest first when making recommendations. By contrast, brokers’ investment recommendations to clients currently only have to be “suitable,” a lesser standard that critics say can lead to advisers putting clients in high-fee products that benefit the adviser more than the investor and eat away at a portfolio’s returns over time.

While many companies in the financial-services industry—including Fidelity, Vanguard and T. Rowe Price—voiced general support for a standard that protects clients’ best interests, many expressed concerns about the specific language and exemptions in the proposal.

In part, the proposal tries to define the difference between “investment advice” and more-general “education,” but the specifics could limit the information that is currently presented to retirement-plan participants as education outside of a personalized advice relationship, Ms. Combs of Malvern, Pa.-based Vanguard said.

T. Rowe Price said in its comment letter that the Labor Department should restrict the definition of advice to circumstances in which an individual would indeed presume he or she is getting carefully tailored and personalized recommendations. The current proposal “goes too far and encompasses circumstances where there is no reasonable expectation of fiduciary trust and confidence,” the Baltimore-based company wrote.

As an example, T. Rowe Price pointed to a common suggestion that workers participate in a 401(k) plan and contribute at least enough to get any matching contributions from their employer. “The fact that such a suggestion is presented in a one-on-one conversation does not create a reasonable expectation of a fiduciary relationship,” T. Rowe wrote in its letter.

In addition, multiple firms suggested simplifying the “best interest contracts exemption” (or BICE), which would allow advisers and brokers to continue charging commissions and some other fees—including 12b-1 fees that are subtracted from mutual-fund assets—if there is a formal contract between the adviser and the client that requires the adviser to act in the best interest of the client.

Calling that approach “extremely burdensome, costly and in some cases unworkable,” Fidelity proposed eliminating the written-contract requirement. It said in its letter that a best-interest standard for 401(k) plans and participants should already be legally enforceable under existing laws.